Violating laws, making losses, damaging environment

The controversial 1200 MW Teesta Stage III Hydro Electric Project (HEP) in Sikkim is operating at 50% capacity due to incomplete power transmission system, thus sustaining huge losses financially, while damaging the environment silently. There is blatant illegality too in the operating system in place under which the project is operating.

River Teesta in Sikkim. Pic: Indiatogether files.

Transmission mismatch

When the Teesta Stage III project was approaching commissioning date, it was clear to the Special Purpose Vehicle (SPV) Teesta Urja Limited (TUL) constructing the project that there was only one transmission line to Kishanganj (Bihar) through which the power could be evacuated. If this line was not commissioned the entire power of Teesta III would remain bottled up and not a single megawatt could be delivered to the grid.

TUL also knew that while the Teesta III to Rangpo (Sikkim) transmission line was a short section, the section between Rangpo to Kishanganj was long and difficult to construct. So as a matter of necessity TUL concentrated on completing the shorter section of the line from Teesta III to Rangpo so that connectivity to the grid is attained and evacuation path is made available.

Attaining grid access

TUL completed one out of two circuits of the Teesta III to Rangpo line, thereby making 400 kV grid supply available. With this supply available TUL commissioned the six units of 200 MW each at Teesta III. Three units were declared commercially operational from 23 February 2017 and the remaining 3 units of 200 MW each were declared commercially operational from 28 February 2017. Hence from 28 Feb all 6 units were claimed to be on commercial operation.

As a result of this incomplete power evacuation system, the entire power generated at Teesta III was being delivered at Rangpo and thereafter through the existing/old double circuit line (of Teesta Stage V) to Binnaguri (West Bengal). In other words the double circuit line from Rangpo to Binnaguri was earlier carrying the power of Teesta V , now this line was carrying the combined power of Teesta III as well as Teesta V. Also several smaller hydro power stations of Dikchu, Jorethang and Tashiding (all in Sikkim) were also using this line to deliver their power into the grid.

The double circuit line from Rangpo to Binnaguri is presently catering to the power generated by several hydro power stations in that area (Teesta V 510 MW, Teesta III 1200 MW, Dikchu 100 MW, Jorethang 100 MW, and Tashiding 100 MW) . The line to Binnaguri from Rangpo is having twin Moose conductor (which was sufficient for the original power of 510 MW from Teesta V) but this line was not envisaged to cater to power of hydro stations of over 2000 MW capacity.

During winters the power output from all the hydro stations of Sikkim is in the range of about 20% of capacity. Due to this low power generation, the Rangpo-Binnaguri line can operate within its loading limit in the winter months. However from June onwards the water inflows of all the hydro power stations in the area would be in a position to generate at 100% capacity. Under such conditions the Rangpo-Binnaguri line would face congestion and overloading due to which the hydro power generation would have to be reduced. Since the problem is primarily due to delay in Rangpo- Kishanganj line the backing down or reduction of hydro power has to be carry out by Teesta III station.

In 2017 while all the units of Teesta III station were claimed to be commissioned on 28 February, it was only in June 2017 that a crisis developed and an emergency meeting was held in Eastern Regional Power Committee (ERPC) Kolkata on 13 June. In that meeting TUL stated that Teesta III station is being restricted to 600 MW (as against 1200 MW capacity) and is daily losing 12 million units valued at INR 6 Crores. (Source, minutes of the ERPC meeting).

Legal hitches of Teesta III

The declaration of commercial operation is the date from which the units and power station have proved and passed the performance test through trial run. The trial run has to be carried out individually on each unit (to prove its capacity of 200 MW) and also the station has to prove its capacity of 1200 MW by operating at 1200 MW for specified period. In case of Power Purchase Agreement (PPA) a unit has to complete a full load operation for 24 hours continuously and the complete project with all 6 units has to operate at full load of 1200 MW for 8 hours continuously.

As per the regulations of the Central Electricity Regulatory Commission (CERC) and the Central Electricity Authority (CEA) the period of full load operation of each unit is 12 hours and for the station as a whole with all 6 units running at full load the station has to prove its capacity of 1200 MW for 12 hours.

However, in blatant violation of these norms, the Teesta III station has not carried out the full capacity test of 1200 MW either for 8 hours or for 12 hours because the transmission line to Kishanganj is incomplete and the transmission system of Rangpo-Binnaguri does not allow more than 600 MW of Teesta III power (as stated by TUL on 13 June 2017 in ERPC).

Speaking bluntly, a power station cannot generate more power than the quantum transmitted (since power cannot be stored). So when there is an admitted transmission constraint which limits the power to 600 MW it is practically and physically impossible for the power station to generate full 1200 MW for 8 hours or 12 hours as required under the mandated laws and regulations.

Despite of these anomalies, TUL filed a tariff application before CERC claiming a tariff to be charged from the four northern states which had signed PPAs for 840 MW out of 1200 MW capacity. On 23 May 2017 CERC passed an order allowing an ad hoc tariff from 23 Feb (3 units) and from 28 Feb 2017 (3 units).

The legal contradiction is clear. A tariff can be allowed/charged only after the station attaining Commercial operation Date (COD). To attain COD the station has to pass the Station capacity test at 1200 MW (full capacity) for 8 or 12 hours. The station can operate at full capacity only if the transmission lines can evacuate 1200 MW. Presently since Rangpo Kishanganj line is incomplete the transmission system cannot handle/evacuate 1200 MW power from Teesta III. Thus due to the incomplete line the power station cannot operate at 100% capacity and thereby it cannot attain the condition of COD. In absence of COD the commercial tariff cannot be charged and so the CERC order is patently erroneous.

Yet another aspect of violation of norms can be seen in the grant of long term open access (LTOA) for the Teesta III Project. The 1200 MW project was constructed by TUL on build own operate and transfer (BOOT) basis and according to the MOU signed between TUL and the government of Sikkim, TUL has to hand over the project to Sikkim after 35 years of operation.

Power Trading Corporation of India (PTC India) had signed the PPA with TUL in 2006 and signed PSA Power Sale Agreements (PSA) with the four northern states in Sept 2006, wherein PTC would buy the total power of Teesta III from TUL. PTC signed PSAs to sell power to four Northern States;

Punjab 340 MW

Haryana 200 MW

U P 200 MW

Rajasthan 100 MW

Total 840 MW which is 70 % of total capacity of 1200 MW.

Out of balance capacity of 30% i.e. 360 MW, 12% i.e. 144 MW is free power for Sikkim (as per MOU) and 18% i.e. 216 MW is for sale in open market. In summation, 840 MW sale to the northern states through LTOA and 216MW sale in market through STOA, with 144 MW free power to Sikkim which is partly consumed in Sikkim and rest is sold out to market.

The Electricity Act 2003 provides for Central Transmission Utility (CTU) for transmission at inter-state level. Power Grid Corporation of India Limited (PGCIL) is the CTU for entire India. Under Sec 38 (2) d of the Electricity Act 2003, PGCIL has the statutory duty to provide open access.

PTC filed an application for long term open access before PGCIL for the long term power sale from Teesta III to the four northern states to take place, which was granted on 26 May 2009 and further amended on 7 October 2015.

The LTOA was granted on condition that the transmission line from Teesta III to Kishanganj is to be constructed by the generation developer i.e TUL. Whereas the power project was to be executed by TUL the transmission line to Kishanganj was to be constructed by TPTL which is a JV between TUL (74 % equity) and PGCIL (26% equity).

Power can be delivered only if LTOA is available. For LTOA the first and foremost condition is that Teesta III to Kishanganj line be completed. This line is incomplete and so the entire tariff petition filed by TUL before the CERC becomes invalid.

The CERC jurisdiction/purview is for interstate generation project

PPA has been signed with four northern states; these four states can get contracted power only through LTOA. In absence of LTOA the 4 purchaser states get excluded and this project does not remain an Inter State Generating Project. Tariff cannot be determined by CERC in such a case. Moreover, the tariff has been calculated by CERC on basis of 1200 MW capacity. When the practical capacity has been admitted by TUL as 600 MW (ERPC 13 June 2017 minutes) the entire tariff basis becomes invalid, and limiting of capacity at 600 MW indicates that the COD condition of full load operation at 1200 MW for 12 hours is not attained. In absence of COD condition charging of tariff becomes illegal and violates CERC tariff regulations.

The All India Power Engineers Federation (AIPEF) in a letter to R.K.Singh, Union Minister of power dated 19 February 2018 has expressed concerns over the inordinate delay in the completion of the transmission line between Rangpo to Kishanganj. The reports of CEA monitoring wing on progress of the transmission line do not inspire any confidence that this line will be commissioned by the stated date of March 2018 (i.e. 31 March 2018). The line has 590 tower locations and total length of 430 circuit km.

As per CEA report 42 tower foundations are pending, 61 towers are yet to be erected and 100 circuit-km stringing is pending as on 31 Jan 2018. CEA reports indicate nil progress during January 2018 while the completion date remains as March 2018.

From the CEA report it appears that the line may not be completed even by 1 June 2018 and delay may well extend up to 30 September 2018. In case the delay is beyond 1 June 2018 it would certainly lead to spillage loss - the power generation loss due to transmission constraints- in 2018 high flow season. The 1200 MW Teesta III project (excluding line) has been constructed at INR 14000 Crores as against CEA approved figure of INR 5705 Crores. This huge cost escalation has put stress on the Govt. of Indian funding agencies including banks and GOI financial institutions like rural electrification corporation (REC) etc.

Loss in the first year of project due to spillage and energy Loss

In 2017 spillage loss was estimated to be in the order of 1100 million units (MU) as against design energy of 5200 MU. Spillage loss of 300 MW is 7.2 MU per day (300x24= 7200 MWh i.e. 7.2 MU). 7.2 million units is that power which could have been sold in market (power exchange) at around Rs 3 per unit. Financial loss per day would be INR 21.6 million (7.2X3= 21.6).

To assess the quantum of energy loss, the data for the period June to September 2017 – including energy sent out ex bus from Teesta III in MU (million units) – was measured as metered by Special Energy Meters (SEM). The data also includes gross generation at Teesta III as per the CEA, energy scheduled as per the Eastern Regional Load Dispatch Centre (ERLDC) ,energy potential possible under high flow conditions – assuming station were to run at 100% capacity of 1320 MW (including 10% continuous overload margin as per specifications). The energy loss calculation also took into account auxiliary consumption @ 1.2%.

If the 400 kV line to Kishanganj had been commissioned, with full inflow available in Teesta, the Teesta III HEP had the potential to generate 3818.6 MU (ex bus) against which the actual energy sent out (ex bus) was only 2356.42 MU – that indicates an energy loss of 1462 MU.

TUL have indicated an energy rate of INR 5 per unit for Teesta III in the ERPC meeting of 13 June 2017. Thus, an energy loss of 1462 MU translates to a financial loss of INR 731 crore due to delay in construction of the transmission line to Kishanganj.

The original estimated cost of the Teesta III to Kishanganj transmission line was INR 770.8 crore, while the loss due to delay in the very first year is INR 731 crore, due to spillage and energy loss, AIPEF letter mentions.

Environmental impact

A joint venture was formed between Teesta Urja Limited and Power Grid Corporation of India Limited in a 75:25 ratio. The new subsidiary company – Teesta Valley Power Transmission company Limited (TVPTL) – was responsible for execution of the transmission line from Teesta III up to Kishanganj.

The cost of Teesta III-Kishanganj transmission line was initially pegged at the price levels of August 2008 at INR 770.80 crore with a commissioning schedule of 36 months from the date of Financial Closure and at a debt equity ratio of 75:25. However, due to delays in the project, the final revised cost estimate was put at INR 1450.36 Crores, as of 5 January 2016, with the revised scheduled commercial operation date fixed as 31 March 2017.

The energy loss of 1462 MU (June-September 2017) also had an environmental impact, asserted AIPEF. They argued that if the Kishanganj line had been completed before June 2017, it would have resulted in extra hydro energy generation of 1462 MU, which would have displaced thermal energy of an equivalent quantum, and saved the equivalent amount of coal-fired energy.

“As 1 kWh of coal-fired energy results in 1 kg of carbon dioxide, the conclusion is that energy loss of 1462 MU at Teesta III has resulted in the release of 1.46 million tonnes of additional carbon dioxide during the period June to September 2017,” argued Padamjit Singh, chief patron of AIPEF.

While TUL may be claiming all kinds of events and circumstances to justify the time and cost overrun of the hydro power project, the time and cost overrun of the transmission line (also constructed by TUL, along with PGCIL) was certainly to be avoided, as this time overrun is over and above the 64 months delay in commissioning the power project. This reflects sheer negligence of both the developer and the lacunae in the functioning of the GoI monitoring agencies responsible for the project.

Soumik Dutta08 April 2018

Soumik Dutta is a freelance investigative journalist based in Gangtok, Sikkim.

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